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Cablegate: Parties Debate Economic Policies Ahead of 2009 Elections

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RR RUEHBZ RUEHJO RUEHMR RUEHRN
DE RUEHDU #0077/01 3501036
ZNR UUUUU ZZH
R 151036Z DEC 08
FM AMCONSUL DURBAN
TO RUEHC/SECSTATE WASHDC 1370
INFO RUCNSAD/SADC COLLECTIVE
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UNCLAS SECTION 01 OF 02 DURBAN 000077

SENSITIVE
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FOR AF/S

E.O. 12958: N/A
TAGS: PGOV ECON EFIN SF
SUBJECT: PARTIES DEBATE ECONOMIC POLICIES AHEAD OF 2009 ELECTIONS

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1. (SBU) Summary: On November 26, 2008 South African political
parties confirmed their optimism about the future of the South
African economy and highlighted areas of concern in a lively
university-sponsored debate in Durban. The political party
representatives did not have major ideological or policy
differences on the economic policy issues they discussed, but
the opposition took the opportunity to critique some policies of
the ruling African National Congress (ANC). The tone of the
discourse was generally serious, but as the opposition party
debaters "ganged up" on the ANC, the ANC representative resorted
to political tactics rather than persuasive rebuttals. End
summary.

Introduction

2. (U) The Graduate School of Business at the University Of
KwaZulu-Natal (UKZN) invited five parties to participate in a
structured debate of economic policy issues on November 26,
2008. Four political parties participated in the economic policy
discussion: the African National Congress (ANC), Congress of the
People (COPE), Democratic Alliance (DA), and Inkatha Freedom
Party (IFP). The ANC was represented by Sihle Zikalala,
Provincial Deputy Secretary, COPE, by Phillip Dexter, National
Policy Coordinator, IFP, by Narend Singh, MP and Spokesperson on
Finance, DA, by Mike Walters, MP and Spokesperson on Finance.
Minority Front leader Amichand Rajbansi was invited, but did not
attend the debate. Over 200 people, including faculty, students,
journalists, politicians, and members of the business community
were in the audience at UKZN.

Lively Debate: Opposition Unified in Criticisms of ANC

3. (U) All party representatives agreed that the current global
economic meltdown has been unprecedented and posed serious
challenges for South Africa (SA). However, they noted that the
South African economy has so far been protected due to its
positive economic policies. Opposition party debaters repeatedly
raised concerns about the uncertainty caused from "mixed
signals" on the country's economic policy sent by senior
leadership of the the ANC (namely ANC President Jacob Zuma). The
ANC representative, Mr. Zikalala, denied that there were
conflicting signals about ANC economic policy, noting that all
statements were consistent with the policy determined at the
Polokwane National Conference in December 2007. He argued that
current economic policies were working, but just needed to be
revamped in some areas.

4. (U) All debaters agreed that the gap between the rich and the
poor remained huge and that unemployment was still the biggest
challenge facing South Africa. The speakers also agreed that
rural economic development and skills development needed to be
addressed for South Africa's economy to prosper. The speakers
also addressed a range of more technical issues including
inflation targeting, interest rate hikes, fiscal policy, labor
law flexibility, and deregulation. COPE's Dexter cautioned
against government interference with the work of the Reserve
Bank.

5. (U) Opposition party representatives argued that BEE has
failed and a new empowerment strategy was needed. The ANC's
Zikalala said that BEE is working but he conceded that it should
be fine-tuned and monitored more closely to ascertain its
success. All the opposition party representatives backed tax
relief for businesses, particularly small and medium
enterprises.

6. (U) The debaters discussed the role of the state in the
economy and the degree of necessary intervention. The DA
representative strongly opposed the idea of state intervention
in the economy. COPE's Dexter raised concerns about the
inefficiency of state enterprises and called for a re-evaluation
of public enterprises to gauge their impact in the economy. COPE
also suggested that a new, clearer industrial policy was needed
in SA and that it must take into account the diversity and
competitiveness of the South African economy.

7. (U) Opposition party representatives also raised concerns
about the poor state of the public service and government
workers. They claimed that rampant corruption and patronage in
the public service has negatively affected South Africa's
economic growth.

ANC Politicizes Discussion

8. (SBU) When he found himself under increasing pressure from
opposition party criticism and unable to provide solid answers,
the ANC's Zikalala blamed apartheid for current inequalities and
argued that in 1994 the ANC inherited a dysfunctional economy.
He raised tensions when he attacked COPE on the issue of its
name and called Mr. Dexter a "traitor" and "former comrade."

DURBAN 00000077 002.2 OF 002


During a question-and-answer session, ANC supporters also
directed criticism at the IFP, raising decades-old issues.
Zikalala's political statements prompted supporters of the ANC
(mainly students from the university) to shout at the COPE
representative Mr. Dexter and other opposition party
representatives during the debate.

Comment

9. (SBU) The debate was an important platform for political
parties to "market" their economic policies to an audience made
up of influential academics and private sector representatives.
The ANC was at the receiving end of many criticisms of its
economic polices, and it was striking to see that the party sent
a fairly junior official to argue its case. Mr. Zikalala was
clearly unprepared to debate facts and figures. One of the few
senior ANC leaders in KZN who could have engaged in a more
serious level of debate is provincial party chairperson Dr.
Zweli Mkhize. It is disappointing that not many other suitable
alternatives come to mind--and makes us wonder if this lack of
deep thinkers and articulate debaters may keep the ANC from
participating in other meaningful public debate.
Also, although South Africa's well-regulated financial sector
and exchange controls against derivative purchases protected its
economy from first-round impacts of the global financial crisis,
the country will not be able to avoid the second round effects
caused by the broader economic crisis.
DERDERIAN

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